Audit points out DEP 's flaws

HARRISBURG – Auditor General Eugene DePasquale issued a withering review Tuesday of the Department of Environmental Protection‘‍s oversight of the shale gas industry and the regulatory agency’‍s practices for responding to citizens’‍ complaints that drilling has affected their drinking water.

The long-promised performance audit details the agency’‍s shortcomings, including failing to consistently issue enforcement orders to drilling companies after regulators determined that gas operations had damaged water supplies, even though the state’‍s oil and gas law requires it.

Mr. DePasquale said during a news conference that while DEP merits criticism for its performance, the dedication of DEP’‍s employees to protecting the environment is not in question.

“DEP needs assistance,” he wrote in a letter to Gov. Tom Corbett that accompanies the audit. “It is underfunded, understaffed, and does not have the infrastructure in place to meet the continuing demands placed upon the agency by expanded shale gas development.”

The report lists eight areas where DEP fell short of its obligations during the study period between Jan. 1, 2009, and Dec. 31, 2012, including the inconsistent water supply replacement orders: The agency had unclear or untimely communication with citizens regarding potential water contamination, used an ineffective complaint tracking system, maintained cumbersome records of shale gas well inspections, relied on a disjointed system of forms and industry self-reporting for tracking shale waste, and left gaps in the collection and online presentation of compliance information.

The audit makes 29 recommendations, 18 of which Mr. DePasquale said “cost practically no money” to implement.

DEP disagreed with all of the audit’‍s findings, but agreed or had a neutral opinion about 22 of its recommendations.

In DEP’‍s response to the audit included in the report, Secretary E. Christopher Abruzzo wrote that “to a great extent, the audit report reflects how the Oil and Gas Program formerly operated, not how the program currently functions.”

Many of the audit’‍s recommendations have already been implemented or are being considered, he added, but some of the audit’‍s findings misinterpret the law or DEP’‍s systems.

Pennsylvania’‍s oil and gas law requires DEP to take enforcement action against drillers who refuse to restore or replace damaged water supplies, DEP said in its response, but companies often restore water supplies voluntarily before official orders are necessary.

The auditors disagreed with this collaborative approach, writing that it “raises concerns that DEP chooses to play the role of a mediator instead of a regulator,” and gives the impression, whether real or not, that companies can “make a deal” and avoid an enforcement action on their record.

In a statement, DEP said several of the 15 water supply disruption cases highlighted in the report were unrelated to shale gas operations, and the companies involved in the incidents have been fined more than $848,000 to date.

The audit lays bare DEP’‍s continued reliance on paper files and manual data entry, as well as a deep disconnect between some paper and electronic records that should reflect the same information.

Auditors were given “unprecedented access” to DEP files, but the report’‍s authors note that they cannot claim full access because “DEP’‍s documentation was, and continues to be, egregiously poor.”

The department acknowledged limitations with its records systems and said it is “making strides to transition to a completely electronic record storage system, but that conversion process is expensive and time consuming.”

DEP instituted a permit fee increase for shale gas wells last month that is expected to raise an additional $4.7 million a year. The money will be used to improve information technology for things like electronic permit applications and mobile digital tools for inspectors as well as to hire at least 25 new employees in the oil and gas program, the agency said.

Patrick Henderson, Mr. Corbett’‍s top energy adviser, said the audit is not a fair representation of the good work being done by DEP or how much the oil and gas program has improved in a short period of time.

“Many states and many countries around the world have traveled to Pennsylvania specifically to learn about what we’‍re doing here and how they can replicate that back home,” he said. “We have a program that we ought to be extremely proud of and Pennsylvanians ought to be extremely confident in.”

Industry and environmental groups also responded to the report.

The Marcellus Shale Coalition, whose members include shale gas operators and associated companies, noted that Pennsylvania’s well permit fees and its ratio of inspections per well are among the highest in the country and reflect DEP’‍s commitment to having adequate staff and rigorous enforcement.

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